MOMENTUM
After a difficult 2009, during which the firm saw revenues decline for the first time since it bought itself back from Grey Advertising eight years ago, APCO enjoyed one of the best years in its history in 2010. Growth of around 15 percent saw the firm recover the previous year’s lost revenues and then some, ending the year with fee income of more than $113 million (about $75 million of that in the North America), and profitability was strong. There was new business from a wide range of clients, including Alcan, Brookings, The Hartford, Intuit, Kodak, Mars, Mastercard, Microsoft, Pinnacle Foods, Rosatom and Tyco Electronics.
REGIONAL REACH
APCO’s Washington, DC, headquarters office remains one of the leading players in the nation’s capital, with public affairs expertise across a variety of sectors, with particular strength in healthcare, energy, technology and telecommunications, and transportation. The New York office, helmed by Nelson Fernandez, has been growing surely and steadily in recent years, and while it lacks the critical mass of most of the full-service agencies, it is a match for them in terms of intellectual firepower. There are additional well-established offices in Chicago, Raleigh, Seattle, Sacramento and north of the border in Ottawa. A new addition in 2010 was a San Francisco office, which adds to the firm’s burgeoning consumer capabilities, and its food and beverage expertise in particular.
INTERNATIONAL REACH
APCO has been expanding its international reach steadily in recent years, and 2010 saw the acquisition of UK firm Eloqui, which adds corporate communications depth to the firm’s existing public affairs operation in London. APCO now has about 140 people in 11 offices in the EMEA region with the Brussels headquarters and the London office still the two largest. The firm has also expanded its presence in the Middle East, partnering with JiWin (the PR company of Dubai Holdings) to create a 50-person operation in the region. Other EMEA offices include Paris, Bonn, Berlin, Rome, Warsaw, Moscow and Johannesburg. Last year marked the firm’s strongest ever Asian performance in terms of revenue (up 40 percent) and profit. Around two-thirds of APCO’s Asia revenues derive from Greater China, where the firm has about 70 people in three mainland offices and another 35 in Hong Kong. APCO Malaysia is now home to a team of 30 and APCO offices in Mumbai and New Delhi are supplemented through an affiliate agreement with leading local independent Blue Lotus.
EXPERTISE
APCO’s strength in public affairs is the foundation on which the business is built, but much of the growth in recent years has come in adjacent practices areas. One obvious priority has been expanding its financial capabilities—the nexus of capital markets and public policy is a holy grail for firms rooted on both sides of that divide—focusing on the increased regulatory scrutiny of financial services firms, but also adding IR and M&A capabilities. Similarly, APCO is a leader in crisis communications, with its Crisis 360 product providing a complete suite of services, from preparedness to management to rebuilding trust post-crisis. Elsewhere in the corporate arena, CSR has been a priority, with work ranging from issue and stakeholder mapping for HP to strategy counsel for Mars to community outreach for the Clinton Global Initiative. But the firm has been expanding its capabilities in some unexpected areas too. It now has about 50 people in its food and consumer products group, which has expertise in nutrition issues and regulatory affairs, but can also handle new product launches and even some more traditional product positioning work. Finally, the firm’s APCO Online division experienced 40 percent growth last year, with assignments from the likes of Mars, Tesco and UAL.
TALENT
With its focus on high-end strategic public affairs and corporate reputation issues, APCO has more intellectual firepower than many firms twice its size, with a leadership team that includes veterans of communications, media, politics, and business, and it continued to expand its senior ranks in 2010. In San Francisco, for example, the firm brought in Cherie Stewart, former Gap communications director, and Mischa Dunton, previously with toy company LeapFrog. In New York, it added Caroline Starke, who adds to the firm’s food and consumer capabilities, and Jessica McCormick, an IR expert who previously worked with Taylor Rafferty. New additions in DC included Gordon Johndroe, former spokesman for the National Security Council and White House deputy press secretary and Judit Arenas, previously chef de cabinet to the secretary general of Amnesty International. The firm has also expanded its International Advisory Board, with new members ranging from a former board director at the US Import-Export Bank to a former deputy secretary at the US Department of Commerce to two veterans of the Bush administration.
CULTURE
The past 12 months have seen a significant investment in succession planning at all levels of the business, with the assistance of a Harvard Business School professor and a former McKinsey consultant, resulting in changes to the firm’s career development approach and new opportunities for a number of employees. That was a major focus on the firm’s 2010 senior management meeting, which brought together leaders from around the global network, and realignment of the firm’s training capabilities (starting with foundational skills, proceeding through account management, people management, client service and business development skills to leadership training) and a new intranet.
INTELLECTUAL LEADERSHIP
Other firms have sought to duplicate APCO’s Global Political Strategies operation, an international team of diplomats, policy advisors and business people who serve as a “personal foreign affairs department” for corporate clients, but it remains a real source of competitive advantage for the firm. In addition, APCO has produced an impressive range of surveys and thought leadership pieces over the past year, including its second annual Employee Confidence Study (a partnership with Gagen MacDonald); a Return on Reputation survey of the retail industry (part of a continuing series that examines the ROI of communications, focusing on outcomes such as consumer behavior, community activism, and public policy); and a Social EQ report that measures the social media efforts of large companies on dimensions ranging from dialogue to customer service to content quality.
PROGRAMS
On the public affairs front, APCO continued to play a leading role in most of the major issues of the day, from financial services regulation to healthcare reform to green energy, while providing clients such as Kodak with insight and expanded capabilities on a global scale. But the firm continues to produce a wide variety of work outside of its traditional areas of expertise. For Pinnacle Foods, for example, the firm helped to reintroduce the Log Cabin brand after the company eliminated high-fructose corn syrup (an assignment the firm won in competition with more traditional consumer agencies), using a blend of traditional media relations, couponing, contests and sweepstakes, experiential and social media tactics. In the financial arena, APCO worked for The Depository Trust & Clearing Corporation to raise the profile of the information services company, and worked with United Airlines parent UAL on a wide-reaching assignment that included public affairs, financial media relations and labor relations. On the corporate responsibility front, the firm helped longtime client Microsoft produce its acclaimed 2010 sustainability report. And in the digital realm, APCO worked with Mars to develop the Healthy Living website and produce online advertising focused on nutrition labeling.
BRAND
For many years APCO was guilty of hiding its light under a bushel, but the past couple of years have seen the firm becoming much savvier about its own marketing, producing surveys and thought leadership articles at an impressive pace: coverage in 2010 included articles in The New York Times, The Wall Street Journal, and The Huffington Post as well as appearances on CNN and CNBC, on issues ranging from US-China trade to the firm’s role in HP’s leadership transition. The firm has also expanded its social media presence, increasing “likes” on Facebook by more than 60 percent and using Twitter to drive traffic to its website.
THE FUTURE
APCO is seeking to expand its defining high-level strategic capabilities (such as the unique Global Political Strategies unit) while broadening both its capabilities and its geographic reach. It might be difficult to accomplish the latter without sacrificing the former, but the growth of APCO from a one-person adjunct to a Washington lobbying shop into a 600-person global powerhouse suggests that it would be foolish to bet against Margery Kraus and her leadership team.